Twice a year, technology entrepreneurs from all over the U.S. compete for the privilege of being locked in small apartments where they work day and night for three months straight to start up their own companies. These lucky few might not sound so lucky, but they're driven by something that's near and dear to the hearts of bootstrapping entrepreneurs: funding.

Newsweek described the Y Combinator contest as American Idol meets Wired magazine. The challenge: to be selected by a panel of judges, or in this case, Y Combinator's founders--Paul Graham, Robert Morris, Jessica Livingston and Trevor Blackwell. Under the VC firm's three-month program, clever ideas involving web-based applications, cell phones and enterprise software come to life, and the future's top techies make their debuts.

Y Combinator provides only $5,000 per startup and an additional $5,000 per founder, but the seed money is just the tip of the iceberg. The cohesive program offers one-on-one mentoring, assistance with the paperwork required to start a business, mediation between founders, personal introductions to potential investors and dinner once a week with a successful entrepreneur. "It helps produce much more successful startups doing it this way rather than giving them some money and saying, 'OK guys, go and start a company,'" says Graham.

Matt Brezina, 26, and Adam Smith, 22, are recent grads of the program and well on their way to revolutionizing e-mail as we know it. They completed the summer 2006 Y Combinator session and founded their San Francisco startup, Xobni Corp., only a year ago. But they've already amassed more than $4 million in VC funding and launched a program that organizes information contained in e-mails. From helping refine the core concept to validating the company, Y Combinator gave Xobni and its founders the jump-start they needed. "It has changed my life," says Brezina. "It took me where I wanted to be in three to four months--accomplishing what I thought would take five or six years."

Ready to apply? Graham recommends finding a business partner, building a cool website or open source project--something that demonstrates your abilities--and submitting a concise application online. Looking for more than a polished business model or even a great idea, Graham is hoping to find people with "brains, energy and a sense of design."